I am thinking allowing the info revealed by insider trading would provide more data to long term investors.
Shareholders already look at (legal) insider activity when making trading decisions. At least in those cases, people are making decisions on an insider's SPECULATION about future stock prices rather than known information that only they are privy to.
Another thing that you are not considering is that insiders themselves RARELY if ever are the ones making insider trades. What usually happens is that insiders leak information to friends and families, and THEY make illegal trades based on this information.
The Raj Rajaratnam case was all about his hedge fund getting whatever info it could about the businesses he was investing in. I don't see where you draw the line on what info you can gather and what you cannot. But info that Raj got from his IBM VP source would leak out to the broader market and might help someone make a long term decision on whether to buy IBM stock or not.
There is no line to draw. Any trading activity based on information that is not made public is insider trading and illegal. That's why these companies are called PUBLICLY-traded companies.